Perhaps it’s time for you to retire – “without cause”
It’s always interesting to watch companies… what they do… and what they try to get away with… and what they hide… and what they disclose… and how they manage their image.
And in all of this, you as – shareholder, employee, stakeholder, or other interested party get to make an assessment of what the company thinks of you when they make public statements that affect your view of the company, its executives, and the company performance in general. Are they (the company PR) telling you the truth? Or, are they trying to cover something up?
You may or may not have a stake in the company. If not, then these events can be pure entertainment and, perhaps, an education for what to watch for in those companies or organizations in which you do have a stake.
So over the past few months we have come to the end of the calendar year. Christmas and the holidays is a nice time for senior executives to retire. Of course, upon the announcement of retirement, there will be a glowing and rosy statement of the senior executives accomplishments and achievements over the years the senior executive has been with the company.
But how many of these are voluntary retirements and how many of these are, what I will call, “retirements with cause” at the hands of corporate Board of Directors?
How can you determine if the “retirement” of a senior executive is voluntary or if s/he was “shown the door” by the Board?
For a private company you really can’t look behind the scenes as to what is going on.
But, with a publicly traded company, the “retirement” of a CEO will trigger the filing of form 8K with the SEC. A company can’t really mess with the SEC unless they are looking for trouble. You can easily find 8K’s on the internet for any public company.
Here is some key language that you can look for in an 8K
The retirement will be treated as a termination by the Company “without cause” for purposes of all contractual entitlements
So, the public PR and the press release will say “retirement”.
But, it’s really “termination without cause”
One truth for the public; another truth for the SEC
The company knows they can fool some people; but they dare not fool others.
And if it needs to be spelled out –
Termination Without Cause allows for termination for any reason but usually requires a longer period of notice and may require a vote by the Board of Directors (majority, 2/3 or otherwise). Additionally, Termination Without Cause generally provides for several months of severance and benefits and may accelerate vesting of other benefits.
Termination Without Cause. The Company may [, upon a [majority] vote of the Board of Directors,] terminate the Executive’s employment under this Agreement without Cause at any time upon [90 days] prior [written] notice to the Executive.
So what’s the point?
What’s the point of a company masquerading the Board termination of a senior executive of a publicly traded company as a “retirement” and not what it really is? You can’t hide what is really going on because of the SEC 8K filing. How many shareholders will bother to look at the SEC filings?
A Board of Directors terminating a CEO without cause is really not getting credit due them. Their job is to evaluate the CEO and remove him/her as needed. To hear that the Board acted to remove a CEO should give the shareholders confidence that the Board is in fact, doing their job, and acting in the best interest of the owners. Why would the Board allow the company PR machine to obfuscate this event as a voluntary retirement?
Someone who did not mince words, obfuscate what is wrong, misdirect, or hide the truth of a company or its products is Steve Jobs. Steve is both a model and an anti-model for management and leadership. I don’t think too many executive coaches, consultants, or professors teaching MBA classes on leadership would recommend the Steve Jobs style of management. But, you can’t argue with results that Jobs was able to achieve with Apple. In 2011 Apple was the most valuable company with a market cap of $366 billion.
Here is an excerpt from the book on Steve Jobs by Walter Isaacson
In the summer of 2008 he launched a product called MobileMe, an expensive ($99 per year) subscription service that allowed you to store your address book, documents, pictures, videos, email, and calendar remotely in the cloud and to sync them with any device. In theory, you could go to your iPhone or any computer and access all aspects of your digital life.
There was, however, a big problem: The service, to use Jobs’s terminology, sucked. It was complex, devices didn’t sync well, and email and other data got lost randomly in the ether. “Apple’s MobileMe Is Far Too Flawed to Be Reliable,” was the headline on Walt Mossberg’s review in the Wall Street Journal.
Jobs was furious. He gathered the MobileMe team in the auditorium on the Apple campus, stood onstage, and asked, “Can anyone tell me what MobileMe is supposed to do?” After the team members offered their answers, Jobs shot back: “So why the f@@k doesn’t it do that?” Over the next half hour he continued to berate them.
“You’ve tarnished Apple’s reputation,” he said. “You should hate each other for having let each other down. Mossberg, our friend, is no longer writing good things about us.”
In front of the whole audience, he got rid of the leader of the MobileMe team and replaced him with Eddy Cue, who oversaw all Internet content at Apple. As Fortune’s Adam Lashinsky reported in a dissection of the Apple corporate culture, “Accountability is strictly enforced.”
“Accountability is strictly enforced.” – Too bad companies have to misdirect the shareholders – the owners of the company – why senior executives are leaving the company. It is to save the embarrassment of one person at the expense of telling a lie to everyone else.
Read about the “culture of accountability” and other insights about Apple
Read a related article about HP